Pointon York completes in specie U-turn

Pointon York is to allow in specie contributions of quoted shares into its Sipp from January and is gearing up to accept protected rights funds.

The company was among the Sipp providers to drop their in specie facility following HMRC clarification in May that was expected to make such contributions too risky for providers.

The clarification ruled that shares being transferred into Sipps should be valued on the average share price at the end of the day creating the risk that the assets could lose value during the time taken to process the contribution.

Within months Pointon York and other providers had reinstated the facility to allow in specie contributions of commercial property but so far few of these firms allow in specie transfers of quoted shares because the process of doing this is more complicated under the regulations.

Michael Smith, head of technical at Pointon York, said that the firm had now reviewed its processes to allow in specie contributions of quoted shares. ‘It’s more complicated than commercial property because of share valuations,’ said Smith.

A government consultation paper on protected rights is to be released this week. Smith said: ‘We hope to be accepting protected rights and that will be a big market,’ he said. ‘We have to change rules and have processes. We’re already working on what we need to do.’

Meanwhile the firm recently received clarification from the HMRC on the tax position of hotel room investments that are held in Sipps following concerns that such investments may be taxed as trading income.

HMRC has said that, provided the returns on these investments are based solely on rental income, with no payment relating to profit made from services of the hotel, then they will not be liable for trading income tax.

‘Most of the hotel room investments we come across will fall into this category,’ said Smith.